McARTHUR COMPANIES

Wanganui Chronicle, Volume 80, Issue 275, 19 November 1937, Page 8

McARTHUR COMPANIES

BILL BEFORE THE HOUSE LIQUIDATION MEASURES [Per Press Association. I WELLINGTON, Nov. 18. Moving the second reading o£ the Companies (Special Liquidation) Extensions Bill, in the House to-day the Minister of Finance (Hon. Walter Nash) stated that the Bill referred to the First Mortgage Freehold Security Company of New Zealand, Ltd., one of the McArthur companies, for which, under the Bill, the Public Trustee is to act as liquidator. Mr. Nash stated that there were only two directors of the company •specified in the Bill, C. T. Alcorn and a Miss Alcorn. The company was nothing but an agency for robbing people who did not understand what they should do with their savings. It was linked up to some extent with a number of other companies which had been already dealt with. It had issued debentures to some eight-two people, and its original nominal capital was £lOOO. Then it was increased to £lO,OOO of 5000 pound shares and 100,000 shilling shares. The actual subscribed capital was £1205 and only £25 was paid up. The company then proceeded to issue debentures to the extent of £109,000. In all 764 debentures were sold, bringing ni £19,100. Another company, Investments Security, Ltd., was next organised to sell the debentures, and it received about £l2OO commission.

The Minister proceeded to deal with the ramifications of this and associated companies in their dealings with a property bought for £3512 by the wife of a man who promoted the original company. The profit was £28,347.

The Minister continued that something should be done to safeguard the savings of people, particularly from a person who went from door to dcor selling debentures. He thought the best course was for people with normal savings to leave their money in the Post Office Savings Bank. Those with larger amounts should invest in Government or local body securities, or, if they wished for other forms of investment, they should consult their bankers or Stock Exchange brokers. That did not mean that every security on the Stock Exchange was sound, but that crooked work of the type he had outlined would not have been possible if the people concerned had first thought of consulting a banker or Stock Exchange broker. The Rt. Hon. J. G. Coates (Opposition, Kaipara) said the whole business was regrettable, but it was doubtful if the Government could have foreseen what was going to happen. The legislation before the House was the final scene in a very unpleasant experience. The Hon. Adam Hamilton (Leader of the Opposition) discussed trustee rations, and said that there had been a bit of a mix-up between all private and public trustees. It would be a good thing if they could originate some scheme to regulate trusteeships in the interests of investors. The Bill was read a second time and passed through the Committee stages without amendment. The Bill was read a third time and passed.